More than ever, companies want to know what their employees are up to

IF THE workers at Japan's Keihin Electric Express Railway Company seem unnaturally cheerful for drizzly autumn mornings, it is because they are being watched. The firm has installed cameras with special scanners at 15 of its stations to measure employees' smiles, ensuring that harried commuters are always greeted with a grin, however forced.

It may seem extreme to Western eyes but it is just one example of a business that is booming: employee monitoring. Companies have long kept a close eye on employees to maintain productivity and guard against theft. But the economic downturn has prompted some to redouble their efforts—and advances in technology have given them the means.

A recent report from Gartner, a consultancy, found that spending on security software rose by 18.6% to $13.5 billion in 2008. The market for security information and event management software (SIEM), which can be used to mine e-mails for keywords and security breaches, grew by 50% according to Gartner. The fastest-growing area is network forensic software, which lets firms record and playback exactly what happens on employees' computer screens, and can even record keystrokes.

Gartner's John Pescatore says the software is “like a giant TiVo” or “a security camera pointed at a till in a bank”. This niche doubled in value between 2007 and 2008, from $25m to $50m. Mr Pescatore predicts that the market will jump another 50% by the end of this year.

Companies use this kind of software, for example, to monitor employees who are about to leave, whether through redundancy or choice, to make sure they do not take sensitive information with them. Managers can spot the moment that an embittered salesperson copies a client database onto a flash-memory stick.

Financial-services firms are particularly vulnerable to the enemy within. The case of Sergey Aleynikov, the Goldman Sachs banker accused in July of stealing high-frequency trading software worth millions of dollars to the bank, was an illustration of the huge value of intellectual property that is at risk of going astray.

Companies also use monitoring software to protect employees from themselves. Malicious software often infects a corporate network by exploiting security holes in web browsers to infiltrate a PC when its user visits a dodgy website. Compromised machines can then be linked up to form “botnets” under external control, which are used to send spam e-mails or disable websites with a flood of bogus requests. When Procter & Gamble ran a security check of its 80,000 PCs, it found 3,000 were infected with botnet software.

Another use of employee-monitoring software is measuring productivity. Managers trying to decide who to make redundant can use forensic software to catch that slacking YouTube addict red-handed.

Even workers on the road are not safe from prying corporate eyes. Several start-up companies, such as Purewire and Zscaler, have launched software to monitor employees outside the company network. Workers accessing the internet from hotel rooms using a company laptop may be surprised to find their web browsing is being monitored by the IT department back in the office. Their page requests flow through a web monitoring service, which can block or report access to certain sites.

Monitoring software can also be used to spot “presenteeism”—employees who turn up in the office every day but then do nothing. Peter Cheese, managing director of Accenture's talent and organisation practice, says that presenteeism has become more common as communications break down between managers and staff in firms that are under financial stress.

But although workforce-monitoring software may provide what seems like useful information, it is no help when it comes to addressing the problems it uncovers. It may also undermine morale and mutual trust. Mr Cheese warns: “If you have to check up on employees all the time, then you probably have bigger issues than just productivity.”